Millions missing out on £689 from HMRC due to common error

Experts have warned that nearly a third of people could be on the wrong tax code - which means many are missing out on hundreds of pounds. A quick look at your tax code could help you get that money back.

Canada Life says workers have paid £5.8 billion too much because their tax code is wrong. The financial services firm carried out a study and found out that 31% of grown-ups have had the wrong tax code before, and they lost about £689 each.

The study also showed that one in six people don't know if their tax code is right and 39% don't understand what the letters or numbers in their tax code mean. Canada Life also discovered that more than two-thirds of folks didn't know how to ask for their overpaid tax back.

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If you have a job or get paid through PAYE, you get a tax code from your boss, which comes from HMRC. You can see it on your payslip. People with a private pension have a tax code too.

Your tax code is important because it tells you how much tax you need to pay on what you earn. It's good to check to make sure it's correct. John Chew, who knows a lot about tax at Canada Life, said: "Understanding your tax code is vital to ensure you're paying the right amount of income tax.

"Those who are not on the right code may find themselves out of pocket. If it's wrong, you may end up contributing more or less than you're supposed to. So, if you haven't checked your tax code recently, now is a good time."

There are a few reasons why you might have the wrong tax code. For example, if you've started a new job and HMRC hasn't got your income details yet. Another reason could be if you've just started working for a company after being self-employed, or if you're juggling more than one job at once.

If you do have the wrong code, the tax office will usually give you an emergency tax code until you get in touch to change it. Remember, sometimes you might have the wrong tax code and owe HMRC money because you've been underpaying.

You can quickly check your code online and update any details that might be causing problems. It's important to fix this as soon as possible so you're paying the right amount of tax.

A spokesperson from HMRC told The Sun: "We don't recognise these figures. Tax codes are based on information given by employers or pension providers. People can check their code quickly and easily online and update any details that may be affecting it."

You can look at your tax code on your online personal tax account, on your payslips, or on the HMRC app. If you've got one, you can also check your code on a "Tax Code Notice" letter from HMRC.

To log in to your online personal tax account, you'll need your Government Gateway ID and password.